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Wrenching Economic Transformations Previous Next
Digital History ID 3356


At one time, the car makers in Detroit produced automobiles that mirrored America's strength and power. They were big, heavy, powerful cars with such expensive options as power windows, power brakes, and power steering. So what if they were not energy-efficient (most got 10 to 13 miles per gallon)? Gas was cheap--just 37 cents a gallon in 1973. The public kept buying big cars, Detroit kept producing them, and the automobile industry reaped big profits.

By the late 1970s, the rising costs of Middle Eastern oil forced the American automotive industry to rethink its strategy. Emerging Arab nationalism and the solidarity of the Organization of Petroleum Exporting Countries (OPEC) drove the price of a gallon of gas toward the dollar mark. American drivers started purchasing smaller, better-engineered, fuel-efficient cars from Japan and Europe. By 1982, Japanese cars had captured 30 percent of the U.S. market.

Since 1973, the American economy has undergone a series of wrenching economic transformations. Economic growth slowed; productivity flagged; inflation rose; and major industries faltered in the face of foreign competition. Despite a massive influx of women into the work force, family wages stagnated. A quarter century of rapid post-World War II economic growth had come to an end.

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